What you need to know about the upcoming fall economic statement

Ahead of the federal government’s Fall economic statement next week, one economist says it’s likely the deficit will rise partly due to tax credits and subsidies. 

Finance Minister Chrystia Freeland is expected to table the federal government’s fall economic statement on Nov. 21. The statement will act as an update on the federal government’s finances, as well as introduce new measures reflective of the government’s priorities. 

Jules Boudreau, a senior economist at Mackenzie Investments, said in an interview with BNNBloomberg.ca Friday that the upcoming fall economic statement is likely to be similar to those from the previous two years. 

“So they knew that the budget deficit over the past year was lower than expected (and) that growth was better than expected, but looking ahead, it’s going to be tougher and because of that, they’ll have to spend more,” he said. 

“There’s a few measures we expect to be added and to be hopefully priced in the fall economic statement that would lead to a higher deficit. There is the cut in taxes for new construction. Hopefully, there’s the subsidies for Volkswagen and Stellantis plants.”

In September, the federal government moved to eliminate GST from new rental projects. Earlier this year, it also announced subsidies granted to Volkswagen and Stellantis-LG Energy Solution to incentivize the companies to build electric battery plants in Canada. 

Amid economic uncertainty, Freeland promised to prioritize fiscal responsibility in next week’s economic update. The focus comes as the federal government faces fiscal pressures from a slowing economy and criticism of excessive spending. 

“I think there’s no way that we actually get a net deficit reduction or net debt reduction. I think it’s basically mathematically impossible. So when she says fiscal responsibility, it’s more a question of the degree to which the debt and deficit will increase with the new measures,” Boudreau said. 

Pressures from a slowing economy are expected to impact federal government revenues, hindering its ability to finance new measures. 

Last month, the parliamentary budget officer projected the federal deficit would rise to $46.5 billion in 2023-24, from $35.3 billion during 2022-23. 

“Overall, I think it’s going to be more of the same, the fact that the deficit is going to have to increase, they don’t have a choice, they’ll try to frame it as inflation fighting,” Boudreau said. 


Freeland also stated the fall economic statement will be centred around affordability and housing. However, Boudreau said it may to tough for the federal government act on that statement.

“It’s tough, in my opinion (the) federal (government) can’t do much, I think it’s more the local government, either provinces or cities. They’re going to try to announce stuff but I don’t think there’s anything with a lot of teeth that they could do. I think they’ve already done more than enough on the demand side.” 

Boudreau said he thinks the federal government may focus on housing supply issues. He added there is no “silver bullet” that he is aware of that would impact affordability in the near term. Instead, he thinks the government may act to reframe previously announced tax cuts on construction for rental units. 

With files from the Canadian Press

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